Sandeep Nailwal, co-founder of Ethereum's Layer 2 network Polygon, expressed concern that the rising trend of meme coin scams could attract regulatory scrutiny.
Nailwal highlighted these risks in a November 21 post on X, pointing to recent events as a potential trigger for government intervention in the crypto space.
QUANT controversy
Nailwal's comments came in the wake of the scandal surrounding Gen Z QUANT, a meme coin launched on the Solana-based platform Pump.fun.
On November 20th, blockchain analytics platform Lookonchain reported that a 13-year-old boy created a token during a livestream event. The meme coin's value soared more than 260% within minutes, then crashed when the boy sold all his holdings for a profit of $30,000.
The boy's actions didn't stop there. Immediately after the QUANT rug pull, he deployed two more tokens (LUCY and SORRY) and repeated the scam, winning another $24,000. These incidents sparked outrage, with affected traders accusing the boy of exploiting Pump.fun for personal gain.
The backlash grew after the boy mocked investors online. Some furious traders retaliated by jacking up prices after he sold, exposing his family and revealing personal information such as addresses and social media profiles. This caused further confusion and things took a dark turn as new tokens themed around his family started appearing on Pump.fun.
Market impact
Industry leaders like Nailwal warned that such incidents could tarnish the crypto industry's image and prompt tighter regulation. He noted that the lack of oversight in the memecoin sector is fueling speculative mania and exposing investors to significant risks.
Mr Nailwall said:
“This could lead to regulatory intervention against meme coin mania. It would be a seismic shift in the current industry narrative. This paints a frightening picture of cryptocurrencies among the public. ”
The ongoing rise in the cryptocurrency market is fueling a wave of meme coin launches, often related to trending topics or individuals. Many of these tokens lack practicality or sufficient support from the community and are prone to pump-and-dump schemes. Investors who enter these markets late often suffer large losses.
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